Advice Sought for First Time Buyer

M

mick84

Registered User
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Hi to all,

I'm looking for some advice from more wise people than I and for the experiences of others who have been in my boat.
This is my current situation. I saw a house that i liked for around 100k. It needs a bit of work, say 30K. It put the idea of getting a morgage in my head. I approached 2/3 banks and they said they would loan 135k over 30-35 years.
can people advise me of what is the best rates to go on? or any experiences they have had - i.e. things they would redo given the experiences of hindsight. I know this may seem basic to some people but it's mean a lot to me. the whole process of even thinking owning a house i'm finding stressful.

Thanks for reading.
 
Mick - 30k seems a lot in this climate and I would be sure to push hard for the right price and be sure to get at least 3 different builders to quote for the work. You could save a whole lot.

Not sure if the bank will give you the 30k for the refurb and you will have to use your own money for that - they will only loan you money for the sale price (less the deposit of course) and if its in seriously bad nick they may not be keen to loan
 
The best standard variable rate currently on the market is AIB's. In the longer term there is no telling how the different institutions will compare, but AIB have been the cheapest for some time now even though they are signalling there are rate rises on the horizon.

I have been given conflicting information on the willingness of banks to lend for renovations. Certainly there seems to be consensus that they don't lend the full amount for renovations, and they are keen to see that any renovations add value to the dwelling. I assumed things like new floors and new windows would add value, but I have been told banks don't consider them to. They would however consider an extension to add value - that seems like putting the cart before the horse. If any poster, particularly our mortgage broker friends, could definitively answer the question over banks lending for renovations it would be great.

My mortgage broker told me that if a bank will lend to renovate then they take a conservative view of the value that will be added - for instance they will say €60k of work yields 75% of that in value = €45k. They will lend 92% of that = €41,400 So there will be a shortfall to be made up with your own cash.
 
Mick, its a fair question. I am equally on the mortgage buzz at the mo and I am looking at AIB. Concerning the purchase of the house and also the renovation, my understanding is that they will grant a mortgage to the value of the house (less deposit of 8%). Then you will need to provide them with an estimate of the cost of the renovation. When applying for your mortgage you will need to submit the estimate for the work involved from a building surveyor / Architect. If the value of the house + the renovation is up to there thinking, they will then grant you a mortgage for the price of the house at 92% and then will cover 75% of the rebuild cost. Thus, cost of house 100,000 and rebuild 30,000 = 130,000 => mortgage of 114,500 (100,000@92% = 92,000 + 30,000@75% = 22,500) thus requiring you to have the balance of 15,500 in cash. (IF THEY APPROVE!!!!).

My question is, how long should we be getting a fixed mortgage rate for??!!!
 
My experience so far has not been great with the banks. For example, take my issue of trying to purchase a house for 90k. so the house needs about 10k work at minimum. The house is originally valued at 120k (love those auctioneers and their wishful thinking), actual market market value would be the aforementioned 90k.
any of the banks will give me any money i need to buy a house but none to do it up. it becomes a virtual nightmare when i mention refubishing it.
my latest query was pretty funny with a woman in the BOI who really hadn't a clue of the point i was trying to make to her.
my arguement for trying to get additional money to do up the house to rental standard (with me living in it also) to try to recoup some extra cash was met with this arguement
1. the house is valued at 120k
2. if i borrow 10k refurbishment, the house to BOI msut realise 130k on the market to become enabled to borrow it.
but,
my arguement was that the auctioneer basically said the house would be sold for 90k.
thus,
1. 90k for the house + 10K refurbishement makes the house more valuable
2. the house cost to is 100k, in better condition for resale (which i explained is my home and asked to cease using the word 'asset') than the auctioneers wish value of 120k
she said,
1. the house must be worth 130k end of...
2. the auctioneer would never sell above the market value
can i ask, how does that make sense? Is this BOI official living in the same planet or is it a ploy to not process a mortgage?
 
mick84 said:
i.e. things they would redo given the experiences of hindsight.
Click to expand...


Interesting question and it's a relief to get away from so many people in grief. We must be running at 20 to 1 people in trouble versus people starting out.

Firstly, your last post and your discussion with the bank, no clue what you were on about so don't even go there.

How much can you afford is the first question? And please do not even think of getting a mortgage for 35 years.

How much have you for a deposit? Are you in a steady job etc.

How much is the house on sale for, how much has similar property sold for, how much are the renovations, people always underestimate this, are you willing to live in it, if it's basic, and do the renovations as and when and if you can afford them.

That last question is very important as banks are loath to loan for the house and the renovations too. I don't think any bank will consider this, in fact if a house needs renovations they won't even loan on it at all, unless you have the cash to do the renovations.

And yes buying a house is stressful, that will never change, and that's a good thing because it is for most people the biggest investment decision of their lives.
 
With the benefit of hindsight, I'd avoid a long mortage term if possible.

In the height of the craziness, I, and many like me, bought houses that were only made affordable by the availability of long term mortgages of upto 35 years.

I know it sounds like a contradiction almost, in that the lower monthly repayments of a 35 loan got me the house I wanted, but looking back, if I had sought a 20 year mortgage, I woud have ended up having to buy elsewhere, or not buy at all maybe, but at least I wouldnt be jealous of those in their 50s now who have long paid off their mortgages and can enjoy their earnings to full, while I'll be paying mine off till I'm 70!
 
I don't see the problem with a long mortgage term.

You can overpay by however much you like to reduce the term, and then if interest rates go up/earnings go down, you can revert to the original repayments. Certainly gives more flexibility. Is the argument that people will not have the discipline to overpay?

We got a 30 year mortgage, and I hope to have it gone in 20.
 
I think Kitty sums it up very well.

Yes Leonmahon the point is that not everybody is as disciplined as you are. So better to get it right from the start.
 
Bronte said:
Yes Leonmahon the point is that not everybody is as disciplined as you are. So better to get it right from the start.
Click to expand...

Well, surely the problem then lies with the person, and not the product? Therefore you can't advise everyone to shun long mortgages, because in some cases they are the ideal, allowing for flexibility and stability. Personally, I think that if you don't have it together enough to be able to vary your monthly payments as they suit, you possibly shouldn't be engaging in such a massive financial commitment as purchasing a house.
 
I've never had a problem with a long term mortgage, sometimes that's the only way to do it and it gives you more flexibility and leonmahon got it right, if you're not in a position to think about how you can vary your monthly payments you maybe shouldn't be taking this on.
 
strat_640 said:
Mick, its a fair question. I am equally on the mortgage buzz at the mo and I am looking at AIB. Concerning the purchase of the house and also the renovation, my understanding is that they will grant a mortgage to the value of the house (less deposit of 8%). Then you will need to provide them with an estimate of the cost of the renovation. When applying for your mortgage you will need to submit the estimate for the work involved from a building surveyor / Architect. If the value of the house + the renovation is up to there thinking, they will then grant you a mortgage for the price of the house at 92% and then will cover 75% of the rebuild cost. Thus, cost of house 100,000 and rebuild 30,000 = 130,000 => mortgage of 114,500 (100,000@92% = 92,000 + 30,000@75% = 22,500) thus requiring you to have the balance of 15,500 in cash. (IF THEY APPROVE!!!!).

My question is, how long should we be getting a fixed mortgage rate for??!!!
Click to expand...

Te above sums are correct - currently working out finances with AIB and this is the formula applied. my one bit of advice however is check exactly WHAT they are happy to cover as 'home improvements' for the loan / remortgage and don't assume it.
 
leonmahon said:
Well, surely the problem then lies with the person, and not the product? Therefore you can't advise everyone to shun long mortgages, because in some cases they are the ideal, allowing for flexibility and stability. Personally, I think that if you don't have it together enough to be able to vary your monthly payments as they suit, you possibly shouldn't be engaging in such a massive financial commitment as purchasing a house.
Click to expand...

And we have another thread going at the moment with someone struggling on a long term mortgage of 35 years, so I say not to long term mortgages, they lull you into a 'low' repayment, but you end up overborrowing.
 
I feel i must say thank you to all those who wrote back, so thank ye?
I think my best option is to at least acquire the property first and then perhaps do it up little by little. It's inhabitable and a lot can be done with careful and wise spending i suppose.
The rates are also a killer. Its hard when you are starting off because you really just are wet behind the ears and you eyes tend to wander to towards the lowest prices. if anyone has any advice on that i would gladly avail of it.
the small things such as the additional extras are also time consuming, such as comparing life and home insurance policies on the market. again, i really am glad to avail of anyones opinions, experiences and advice.
sorry again about my earlier rant on a previous post. an off day.... i suppose we are all due one now and again!
 
mick84 said:
I feel i must say thank you to all those who wrote back, so thank ye?
I think my best option is to at least acquire the property first and then perhaps do it up little by little. It's inhabitable and a lot can be done with careful and wise spending i suppose.
The rates are also a killer. Its hard when you are starting off because you really just are wet behind the ears and you eyes tend to wander to towards the lowest prices. if anyone has any advice on that i would gladly avail of it.
the small things such as the additional extras are also time consuming, such as comparing life and home insurance policies on the market. again, i really am glad to avail of anyones opinions, experiences and advice.
sorry again about my earlier rant on a previous post. an off day.... i suppose we are all due one now and again!
Click to expand...

Hi Mick84,

If the house is inhabitable then I doubt that 10k would be anywhere near enough to make it anyway habitable and rentable. Just something to be aware of. Labour is somewhat cheaper than the boom years but ,materials are arguably more expensive. I've built a house in the last year and I would definitely have bought a similar house cheaper in current market, but I needed to build in the location I did.
 
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